Cloud cover and expected oil returns
Abstract Satellites can “sense” oil inventory, but cloud cover prevents observation, which reduces the flow of information into the oil market and creates uncertainty about information availability. The effects of the availability of such information on oil prices need to be thoroughly explored. The...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Springer Nature
2023-09-01
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| Series: | Humanities & Social Sciences Communications |
| Online Access: | https://doi.org/10.1057/s41599-023-02128-5 |
| _version_ | 1797577416554577920 |
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| author | Xianfeng Hao Yudong Wang |
| author_facet | Xianfeng Hao Yudong Wang |
| author_sort | Xianfeng Hao |
| collection | DOAJ |
| description | Abstract Satellites can “sense” oil inventory, but cloud cover prevents observation, which reduces the flow of information into the oil market and creates uncertainty about information availability. The effects of the availability of such information on oil prices need to be thoroughly explored. Therefore, using time-series prediction, this paper examines the effects of the availability of satellite-based information on oil returns. The cloud cover above the floating roof tanks in major oil storage areas is measured to predict oil returns through regression approaches. The empirical results indicate that higher cloudiness in a week leads to lower oil returns in the following week. The predictive ability of cloudiness is significant from both in-sample and out-of-sample perspectives. The ability of cloudiness measures to predict oil returns can be explained by information uncertainty and information flow channels. The findings have important implications for asset pricing and risk management using big data. |
| first_indexed | 2024-03-10T22:07:59Z |
| format | Article |
| id | doaj.art-02039832c9ab44939bc0abdb7630b301 |
| institution | Directory Open Access Journal |
| issn | 2662-9992 |
| language | English |
| last_indexed | 2024-03-10T22:07:59Z |
| publishDate | 2023-09-01 |
| publisher | Springer Nature |
| record_format | Article |
| series | Humanities & Social Sciences Communications |
| spelling | doaj.art-02039832c9ab44939bc0abdb7630b3012023-11-19T12:42:32ZengSpringer NatureHumanities & Social Sciences Communications2662-99922023-09-0110111010.1057/s41599-023-02128-5Cloud cover and expected oil returnsXianfeng Hao0Yudong Wang1Antai College of Economics and Management, Shanghai Jiao Tong UniversitySchool of Economics and Management, Nanjing University of Science and TechnologyAbstract Satellites can “sense” oil inventory, but cloud cover prevents observation, which reduces the flow of information into the oil market and creates uncertainty about information availability. The effects of the availability of such information on oil prices need to be thoroughly explored. Therefore, using time-series prediction, this paper examines the effects of the availability of satellite-based information on oil returns. The cloud cover above the floating roof tanks in major oil storage areas is measured to predict oil returns through regression approaches. The empirical results indicate that higher cloudiness in a week leads to lower oil returns in the following week. The predictive ability of cloudiness is significant from both in-sample and out-of-sample perspectives. The ability of cloudiness measures to predict oil returns can be explained by information uncertainty and information flow channels. The findings have important implications for asset pricing and risk management using big data.https://doi.org/10.1057/s41599-023-02128-5 |
| spellingShingle | Xianfeng Hao Yudong Wang Cloud cover and expected oil returns Humanities & Social Sciences Communications |
| title | Cloud cover and expected oil returns |
| title_full | Cloud cover and expected oil returns |
| title_fullStr | Cloud cover and expected oil returns |
| title_full_unstemmed | Cloud cover and expected oil returns |
| title_short | Cloud cover and expected oil returns |
| title_sort | cloud cover and expected oil returns |
| url | https://doi.org/10.1057/s41599-023-02128-5 |
| work_keys_str_mv | AT xianfenghao cloudcoverandexpectedoilreturns AT yudongwang cloudcoverandexpectedoilreturns |